Renewable Energy Consumption-Economic Growth Nexus in Italy

International Journal of Energy Economics and Policy, 7, 6, 119-127, ISSN: 2146-4553

9 Pages Posted: 4 Jan 2018

See all articles by Cosimo Magazzino

Cosimo Magazzino

University of Rome III; Royal Economic Society; Italian Economic Association

Date Written: 2017

Abstract

This study examines the renewable energy consumption-economic growth nexus in Italy over the period 1970–2007. Results of unit root tests show that all variables are non-stationary in their level form, but stationary in first differences. Cointegration analysis reveals that a single long-run relationship emerges. According to the long-run estimations, if renewable energy consumption increases by 1%, real gross domestic product (GDP) decreases by 0.23%. The Toda and Yamamoto approach shows that exists a unidirectional causal flow, running from renewable energy consumption to aggregate income, in line with the “growth hypothesis.” Moreover, these results are confirmed by Granger causality tests. Forecast error variance decomposition evidence that the forecast errors in real GDP are mainly due to uncertainty in GDP itself and renewable energy consumption, while the errors in predicting the renewable energy consumption are sensitive to disturbances only in energy equation.

Keywords: Renewable Energy Consumption, Economic Growth, Causality, Italy

JEL Classification: B22, C32, N54, Q43

Suggested Citation

Magazzino, Cosimo, Renewable Energy Consumption-Economic Growth Nexus in Italy (2017). International Journal of Energy Economics and Policy, 7, 6, 119-127, ISSN: 2146-4553, Available at SSRN: https://ssrn.com/abstract=3094709

Cosimo Magazzino (Contact Author)

University of Rome III ( email )

Via Ostiense 139
Rome, RM 00154
Italy

HOME PAGE: http://scienzepolitiche.uniroma3.it/cmagazzino/

Royal Economic Society ( email )

London
United Kingdom

Italian Economic Association ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy

HOME PAGE: http://www.siecon.org/online/en/

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